AKRON-A federal jury has ordered a Chicago-based tire and commodities exporter to pay $2.8 million for defrauding Uniroyal Goodrich Tire Co. On May 27 the jury in the U.S. District Court, Northern District of Illinois, found Mutual Trading Corp., its president Mohammad Shafiq, its vice president John Hauper and former U.G. Tire pricing administrator Richard Germano in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO) and the Illinois Consumer Fraud and Deceptive Business Practices Act.
The Akron-based tire maker claimed in its 1990 lawsuit that the defendants cheated the company out of thousands of dollars between 1987 and February 1990 by submitting false claims for credits and reimbursements under its dealer incentive programs.
The jury awarded U.G. Tire $2.48 million in compensatory damages and $320,000 in punitive damages from Mutual Trading and the three defendants.
Defense attorney Rory Cassidy said his clients had not decided whether to appeal the decision. Mutual Trading officials could not be reached for comment.
U.G. Tire said it sold tires to Mutual Trading for export to the Middle East and Africa from 1982 to February 1990, but the problem began while Mr. Germano was international sales division pricing administrator from 1986 to Feb. 26, 1990.
From about 1987 until February 1990, the tire maker claimed, Mutual Trading and Mr. Germano ``entered into an agreement or scheme to defraud (U.G. Tire) and to benefit themselves.''
The suit stated Mutual induced Mr. Germano to approve unauthorized benefits by offering him money, valuables and a promise of future employment.
To support its claims, U.G. Tire described a number of alleged incidents as examples of a pattern of activity to defraud the company. Among the alleged activities, U.G. Tire claimed:
Mr. Germano was ``lenient'' in approving Mutual's cooperative advertising claims and reimbursed the exporter the full cost of billboard advertising instead of the company's policy of 50 percent;
Mutual submitted inflated invoices for advertising on billboards in West Africa and Nigeria that in some cases were never erected;
Mutual claimed volume bonus credits for tire orders placed at the end of a year that were later canceled, shipped or billed the following year;
Mr. Germano agreed to invoice Mutual for tires sold in 1988 at 1987 prices, waived interest and finance charges and changed finance terms; and
Mutual received credit for false claims of more than 4,000 defective tires and ``short shipments.''